Adult tissue-derived mesenchymal stromal cells (MSC) have demonstrated promise in treating various pathologies including myocardial infarction, graft versus host disease and other tissue injuries such refractory wounds. Much of current work on MSC-based therapies consists of the development of cell entrapment matrix to control cell function and fate after implantation. While MSC had shown to have immunomodulatory properties, the impact of the MSC-encapsulated biomatrix on the host macrophage immunophenotype and host foreign body reaction is less clear. We hypothesize that adult, human bone marrow-derived MSC (BM- MSC) that are encapsulated into a 3-D biomaterial will preferentially modulate the polarization of host primary macrophages from a pro-inflammatory state towards a pro-healing and anti-inflammatory phenotype. A clear understanding of this three-way interaction between encapsulated MSC, macrophages, and biomaterial using primary human cells is required for the development of effective MSC-hydrogel strategies in cell-based regenerative medicine. To achieve this, we will: (1) formulate well-characterized biomaterials with improved biomechanic properties including strength and lack of contraction over commercially-available cell-delivery matrices for BM-MSC encapsulation; (2) assess the immunophenotype of blood-derived primary macrophages as modulated by biomaterial-entrapped BM-MSC in 3-D co-cultures; (3) confirm the ability of 3-D biomaterial- entrapped BM-MSC to recruit and modulate macrophage pro-healing phenotype in a wound model.